Stock Name: Mewah
Company Name: MEWAH INTERNATIONAL INC.
Research House: UOB KayHian
Company Name: MEWAH INTERNATIONAL INC.
Research House: UOB KayHian
UOB KayHian initiates Mewah International (MV4.SG) at Buy with a $1.28 target, based on 12X 2012F P/E, a 30% discount to Mewah’s purer upstream peers.
The house says the palm oil refiner is a “niche and efficient” downstream player that can achieve significant economies of scale with its strategically located and large-scale refineries; “for example, its West Port plant’s direct pumping facilities to/from the port give Mewah a cost advantage of at least US$5/ton.”
The house says the palm oil refiner is a “niche and efficient” downstream player that can achieve significant economies of scale with its strategically located and large-scale refineries; “for example, its West Port plant’s direct pumping facilities to/from the port give Mewah a cost advantage of at least US$5/ton.”
The house says earnings could achieve 20% CAGR over 2010-13 from US$88 million ($112.6 million) to US$150 million, driven mainly by volume expansion and widening margins on increasing contribution from the higher-margin consumer pack division.
With 10%-15% of total sales coming from Africa, the house notes Mewah is “a play on edible oil demand in Africa” where its consumer pack business and bulk segment are doing well.
Cites catalysts as potential M&A to expand marketing and distribution capabilities in Africa, and upstream expansion to enhance margins.
Shares are off 0.9% at $1.05.
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